RISK MANAGEMENT
Want to save some green on malpractice insurance? Here are 5 ways to do it I have been a risk manager at ALPS for well over two decades now, which helps explain why I personally view the purchase of legal malpractice insurance as a necessary expense. Having to face the fallout of a malpractice misstep while uninsured is something I would never wish upon any lawyer because, for some, the final outcome can so easily be a tipping point toward financial ruin. That said, the interesting issue for me is the affordability question; and while reasonable minds are free to disagree as to the definition of affordability in this context, I thought sharing five tips as to how one can favorably influence a quoted rate1 might be useful. After all, everyone wants to save a little green whenever and wherever they can. When I was much younger and in the early years of adulthood, the initial deductibles I chose for my homeowners and auto policies were low for a hopefully obvious reason. Cashflow in the early years meant that I couldn’t easily afford to cover a high deductible in the event of a claim. Of course, over time, my financial situation improved to the point where I could afford to take on a bit more of the risk, which is when I started to responsibly raise my deductible as a way to save a little money. So, my first tip is if you can afford to take on additional risk, consider raising your deductible. 1 For additional information on how the cost of malpractice insurance is determined see: https://www.alpsinsurance.com/about/ true-cost-of-legal-malpractice-insurance
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Tip number two is a bigger deal than many lawyers seem to think. Let me start by saying I do realize, and in fact agree, that all lawyers deserve to be paid for all of the legal work they do. I also sympathize with the view that malpractice insurers should mind their own business and not dictate how any lawyer should run his or her practice. Unfortunately, for some lawyers there is an elephant in the room, which is failing to accept the reality that there really is a strong correlation between aggressive collections actions and malpractice claims. If you regularly sue for fees — meaning two to three times or more every year — that decision is costing you money. Thus, tip number two is if you regularly sue for fees, consider stopping this practice and focus on finding ways to prevent serious delinquencies from ever developing in the first place. Now, I have a question for you. If you wanted the best price for a home you are about to sell, what would you do to try and get the best price? I think most sellers would do all they could to spruce up the place. It’s all about trying to show their home in the best light. In short, presentation matters in all kinds of financial transactions, be it a loan application, selling property, or an application for malpractice insurance, which brings me to tip number three. Your application is the one chance you have to set the right impression so make the
Mark Bassingthwaighte Since 1998, Mark Bassingthwaighte, Esq. has been a Risk Manager with ALPS, an attorney’s professional liability insurance carrier. In his tenure with the company, Mr. Bassingthwaighte has conducted over 1,200 law firm risk management assessment visits, presented over 400 continuing legal education seminars throughout the United States, and written extensively on risk management, ethics, and technology. He is a member of the State Bar of Montana as well as the American Bar Association where he currently sits on the ABA Center for Professional Responsibility’s Conference Planning Committee. He received his J.D. from Drake University Law School.
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